9/06/2004

Home, Safe Home

By Dana Berliner

Anyone who owns a home, a small business or a piece of property became much more secure in those possessions on July 30. That day the Michigan Supreme Court released a unanimous decision ruling unequivocally against government use of eminent domain to take private property because someone else's use of it might be more profitable.

And D.C. Mayor Anthony Williams isn't happy. At a press briefing, he regretted the D.C's power to take property might be limited and said he believes it appropriate to take economically viable businesses for "higher" economic uses.

In Wayne County vs. Hathcock, the Michigan Court unanimously overruled the infamous Poletown decision and caused a seismic shift in the legal battle between home and business owners on one side and an unholy alliance of tax-hungry bureaucrats and land-hungry developers on the other. Decided in 1981 by the Michigan Supreme Court, Poletown was the first major decision in the United States upholding use of eminent domain for "economic development" -- increasing tax revenues, jobs and the local economy generally.

In that case, General Motors convinced Detroit to condemn Poletown -- a neighborhood of more than 1,000 homes, 600 businesses, churches and a hospital -- so GM could build a new car-manufacturing facility. GM and Detroit's mayor claimed the project would produce more than 6,000 jobs and help restore economic health to the city. A divided Michigan Supreme Court agreed bolstering Detroit's economy was so important Poletown could be destroyed. As it turned out, the GM plant never came close to living up to its promises. At its height, it employed less than 60 percent of what it had forecast.

The Poletown decision rocked the country when it first came out. The U.S. Constitution and all states limit eminent domain to condemnations for "public use." Until 1981, that included condemnations for roads, public utilities, and to eliminate slums or severely blighted neighborhoods. But Poletown allowed cities to condemn property to give it to a private business to increase its private profits, on the assumption that business' success would economically benefit the area. The decision could be used to justify condemning any property at all. Whose home wouldn't produce more taxes and jobs as an industrial plant or large retail establishment?

Poletown was cited by other state courts in upholding eminent domain for private businesses. As Mr. Williams remembers from law school, it is cited in every property law textbook as one of the three most important and influential eminent domain decisions in U.S. history.

For 23 years, it has been the foundation of the most oppressive eminent domain practices sweeping the nation. And on July 30, 2004, the Michigan Supreme Court admitted it had been a terrible mistake, a "radical departure" from the protections written into the Constitution to protect individuals from abuses of power and the taking of their properties for other private parties.

The Michigan Supreme Court finally recognized what should have been obvious at the start: Every business produces taxes and jobs and contributes to the economy's health, but that does not and cannot mean all private businesses are now "public uses" for which others' property may be condemned.

Mr. Williams wants to use that same rationale to remove the current Skyland Mall in Southeast on the unsupported theory the city can come up with some higher economic use than the current functioning and viable businesses.

The mayor recognizes the tide is turning against him. The last few years have seen a growing trend of greater judicial scrutiny of government's use of eminent domain. The Illinois and South Carolina supreme courts recently held eminent domain could not be used for economic development. And other decisions from Arizona, Colorado and New Jersey also have struck down condemnations for private parties.

Yet other courts, in Nevada and Connecticut, recently upheld condemnations for private business development, relying on the Poletown precedent. The U.S. Supreme Court will decide this fall whether to hear the Connecticut case and if the U.S. Constitution allows razing a neighborhood for economic growth.

Mr. Williams sees the opposition to eminent domain for private parties as a conspiracy of property rights advocates. It is not. Instead, it's a movement of people who have put their sweat and their dreams into their homes and businesses and don't want to lose them so that someone else can own a home or run a business on the very same property.

In the wake of the Michigan decision, textbooks will be rewritten. Cities, including the Washington D.C., will be forced to reconsider plans to seize homes and businesses because maybe someone else could make more money there.

With this decision, the nation took a giant step for protecting people's rights to keep the homes and businesses they love.

Mr. Williams should embrace this decision as strengthening the rights of D.C. home and business owners. If the District wants true economic development, it should start removing obstacles to private development instead of getting rid of existing businesses.

Dana Berliner is a senior attorney for the D.C.-based Institute for Justice. She also is author of "Public Power, Private Gain," the first nationwide study of eminent domain abuse. Contact Ms berliner through the Institute's website www.ij.org.

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